Dave Ramsey bluntly warns Americans on 401(k)s, market swings

Faced with uncertainty in the stock market and concerns about a possible recession, many American workers are deeply focused on managing their daily financial responsibilities.

At the same time, they remain committed to securing their future. Many choose to invest in retirement savings plans such as 401(k)s and IRAs, recognizing the importance of preparing for financial stability in retirement and mitigating the unpredictable nature of the economy.

Dave Ramsey, a prominent personal finance expert and bestselling author, recently shared his insights in an exclusive interview with TheStreet, addressing some concerns many Americans have about their 401(k) accounts and the most effective strategies for wealth-building.

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American workers continue to value retirement savings programs such as 401(k) plans and IRAs, viewing them as critical components of their financial plans. These tools remain central to long-term financial security, even in volatile market conditions.

A 401(k), especially one sponsored by an employer offering matching contributions, is widely regarded as a reliable way to build retirement savings. The system’s automatic payroll deductions simplify the process, ensuring consistent contributions with minimal effort.

Related: Dave Ramsey sends strong message to Americans on 401(k)s

IRAs, on the other hand, provide a broader range of investment options that may not be available in some 401(k) plans. However, they require a more hands-on approach, as individuals must set up the account and organize their contributions independently.

Ramsey offers compelling insights into market trends and how they influence retirement investments, including 401(k) plans and other financial strategies.

Dave Ramsey has a warning about 401(k)s, debt

Ramsey emphasized wealth-building for the future, describing a 401(k) contribution strategy and a personal finance approach that focuses on a long-term horizon. 

Ramsey offered the following warning about financial behavior people should avoid.

“Tell your money what to do instead of wondering where it went before the month begins,” he said.

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He expanded on that word of caution with some practical advice about freeing up funds for 401(k) contributions. 

“Your most powerful wealth building tool is your income,” Ramsey said. “If you’re a typical American — most people — that makes them more money. That gives them the money to put in their 401(k), in their Roth, and to let it grow in some good growth stock mutual funds.” 

Ramsey mentioned another money priority on which people should focus.

“Getting out of debt, so that you free up your income is a powerful move,” he said. “And no one wins on accident. Winning is an intentional act, whether it’s in your marriage, raising kids, in your success or in your money. It’s an intentional act in your money.”

Related: Scott Galloway sends strong message on Social Security, boomers

Dave Ramsey discusses 401(k)s, market turbulence

An additional piece of advice Ramsey offered involves people planning better for exactly how they will spend the money they earn so they can invest more in 401(k)s.

“It’s called a budget,” he said. “And those sound like old fashioned and grandma things. But if you learn to live on less than you make, and you learn to invest and you stay out of debt and you do it with a plan. Those are the keys of people that actually become wealthy.”

Ramsey also addressed a mistake many people make during periods of market turmoil.

“I tell them, turn off the TV. Because, you know, if you watch this stuff minute by minute, it’ll give you a heart attack and it’ll cause you to jump out of the market,” he said. “You go down these wormholes in the internet, and you hear all the conspiracy theories and all this stuff. So turn your computer off, turn your TV off as far as investing goes.”

“I’m a long-term investor,” Ramsey continued. “So the short-term temper tantrums I’m not going to get involved in. And you’ve really got to manage your inputs because all of us can increase our anxiety if we hang out with people who are anxious.”

Related: Veteran fund manager unveils eye-popping S&P 500 forecast

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